As Apple prepares to implement changes to app tracking transparency in iOS 14.5, CNBC spoke with several former Facebook employees to get details on why Facebook is so strongly opposed to the planned privacy updates.
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Starting this spring, Facebook and other app developers will require explicit permission to access a user’s advertising ID, or IDFA, which is used to track app and website usage for ad targeting purposes. Facebook has campaigned extensively against App Tracking Transparency, removing full-page newspaper ads and trying to position Apple as an enemy of small businesses.
One of Facebook’s main arguments is that Apple’s changes will hurt companies that use Facebook’s advertising tools, but former Facebook employee Henry Love told CNBC that for many companies the change may not even be noticeable.
Less ad tracking data will prevent Facebook and its customers from targeting ads as effectively as they can now, but many businesses may not need a lot of data for effective ad targeting. For example, a small coffee shop in Texas likely uses broad targeting categories such as zip code and age range for ads, which is data Facebook can collect from its own apps without needing the IDFA.
“If you were to talk to a restaurant owner somewhere and ask them what IDFA is, I don’t think any of them would know what that is,” said Love. “It affects Facebook widely. Not small business owners.”
Among the few “small business owners” who can feel the effects of the IDFA change are start-ups backed by venture capital money that have hired professionals with the skills to target users with sniper precision, Love said.
People targeting users with IDFA via mobile, internet and the Facebook Audience Network are ‘not small companies’, and Love calls such companies ‘cutting edge VC-backed startups’.
App tracking transparency threatens Facebook’s view-through conversion tracking, a metric that allows ad companies to find out how many people saw an ad, didn’t click on it, but later made a purchase related to the ad. Retailers can capture the information of the person who purchased an item and then share it with Facebook, where Facebook can determine if that person’s IDFA matches a user who saw an ad for the purchased product.
CNBC says the loss of this information can have a big impact on Facebook because if advertisers can’t accurately measure the effectiveness of Instagram and Facebook ads, they can shift more of their budget to other apps and services.
Facebook’s Audience Network, which offers ads in non-Facebook apps, will also be affected as it uses IDFA data to choose the best ads to show to users based on Facebook data. If users choose not to share the IDFA, Facebook’s personalization efforts outside of its own apps become useless.
Facebook plans to ask users for permission to access the IDFA and is testing wording that suggests tracking will provide a better ad experience. Facebook test prompts encourage customers to allow IDFA usage to “support businesses that rely on ads to reach customers.”